Ulaanbaatar /MONTSAME/ Today's Parliamentary plenary meeting has approved amendments on Banking law by 80.4 percent vote on January 18. The changes are expected to contribute significantly to economic development.
Head of Economic Standing Committee D.Damba-Ochir stated, “MongolBank is working on decreasing loan rates. The standing committee has also formed a working group on the same matter. The current loan rate is an indicator of economic situation that we are in. Maintenance of stable and sustainable financial system is a medium- to long-term issue. On the other hand, if approved, Law on Investment Banking will create opportunities for foreign banks to invest long term at low cost. The new legislation also bans commercial banks from forming subsidiary companies. The banks will now provide loans and custodian services only.”
Initially the bill contained a clause that authorizes the Central Bank to set a limit on loan interest rate, which was later removed. Governor of MongolBank N.Bayartsaikhan expressed his stance on interest rate and its regulation. “Law on Banking is a general regulation law. The goal of the law aims to ensure bank's stability and reduce middle and long term risks. Therefore it indirectly influences the loan interest. Interest rate decline will boost citizens’ confidence in banking system and maintain reliability.”
When asked his opinion on possibility of foreign banks entering into domestic market, he said, “I personally think that foreign banks could operate in Mongolia. If the investment banking bill is approved, it will be possible for foreign banks to offer investment banking services in our country”
Currently, Golomt, Ulaanbaatar and Trade and Development banks have subsidiaries. “Starting April 1, it will no longer be possible for commercial banks to form subsidiaries, and directions will be given to liquidate the ones they already have“, said Deputy Governor of MongolBank B.Lkhagvasuren during Economic Standing Committee’s meeting on January 17.